Optimizing the 4 Opposing Goals of CLM

A great Contract Lifecycle Management (CLM) system has the potential to transform the way your organization does contracting. Through CLM you can increase contract velocity, reduce risk, introduce automation, enforce standardization of process, make better-informed business decisions, and generally improve just about every aspect of contracting from generation to negotiation to signature and beyond. It's pretty incredible.

Part of what it takes to set up a CLM that is great for your organization is an understanding of two things: 1) that there are opposing goals you must balance when designing and building a CLM system and 2) how a CLM system can help you optimize the achievement of those opposing goals.

The following are the four pairs of opposing goals in CLM and how you can optimize your achievement in all of them.

Standardization vs. Flexibility

In a perfectly standardized contracting system, all contracts must follow a specific flow that leaves no room for deviations from the standard. Like components on an assembly line, each contract moves step by step through the process in the exact same way. This is great for reducing complexity and keeping things organized, but it can be prohibitively restrictive. It lacks flexibility.

Highly flexible processes are what many organizations have before implementing CLM -- everything is done via word processors and email and anyone can do anything at any time. This approach can overcome any hurdle thrown at it. Eventually. While it is adaptable and versatile and flexible, it is also highly disorganized and chaotic. It lacks standardization.

When setting up your CLM you must understand how these two opposing goals relate. Know that when you increase standardization you are almost certainly doing so at the expense of flexibility. The more rules you put in place, the less effectively your CLM can address exceptions and deviations. You must strike a balance. Understand your users and find that balance where they expect it to be.

You must also understand how a CLM can give you more standardization and flexibility than you would have without a CLM. If you define just enough rules to achieve standardization and create processes for how exceptions are handled, you can construct something that is malleable and adaptive rather than brittle. Do that and you will be well on your way to implementing a great CLM that achieves standardization and flexibility.

Automation vs. Simplicity

CLM systems allow your organization to automate a lot of the pieces of your contracting process. You can build out automatic delegation of authority (DOA) levels, escalation policies, negotiation routings, reminders, and more. High levels of automation may reduce the workload of users and increase adherence to standards, but it requires lots of configuration, rules, and possible complexity. It lacks simplicity.

A CLM system can also be an incredibly simple thing-- one that relies on users to determine how to route contracts and gather approvals. CLM does the important and valuable jobs of versioning, redlining, and organizing documents but leaves most everything else to its users. Such a CLM is easy to set up and maintain and does provide value, but there is so much more that can be unlocked. It lacks automation.

Because high levels of automation will often reduce simplicity, you must make sure you understand which pieces of automation are most valuable for your organization. Build only the automation that is worth the reduction in simplicity and build it in the simplest way possible using standard configurations rather than complex customizations.

Great CLM platforms allow you to build processes that are both automated and simple, generally done with a "clicks not code" approach to workflows and process automation. A well-configured CLM system has highly-valuable pieces of automation while maintaining simplicity.

Velocity vs. Risk Reduction

Different users of the same CLM system often have opposing goals. Take sales users and legal users, for instance. Sales users want a CLM system to eliminate hurdles so that they can get contracts signed and executed as quickly as possible. Such a system is great for getting deals closed and increasing contract velocity. But it lacks risk reduction.

Legal users are far less concerned with getting contracts executed quickly. They would much rather slow things down, get all the proper reviews and approvals in place, and ultimately achieve risk reduction. Such a process often reduces contract velocity.

When configuring your CLM system you must navigate these opposing goals and achieve a balance that satisfies all of your users. Create as many oversight and review steps as are required to achieve the desired level of risk reduction but not so many that you frustrate users who need contracts executed quickly.

A great CLM system allows you to use aspects of risk reduction to increase contract velocity. For instance, a CLM "terms library" allows sales users to use pre-approved fallback language when clients try to negotiate terms. This approach enables sales to move quickly while giving legal the peace of mind that comes from guardrails in the process. In this way your CLM system gives you increased contract velocity and reduction of risk simultaneously.

Improvement vs. Adoption

CLM gives your organization the chance to improve the way it approaches contracts in myriad ways. What was once a slow, opaque, chaotic, and error-prone process can become quick, transparent, organized, and error-free. Through CLM you can roll out a completely revolutionary process that improves many contracting aspects all at once. Unfortunately, change is difficult for most people. Though this all-at-once approach maximizes quick improvement, it may be difficult to bring people onboard. Such an approach may lack adoption amongst your users.

Playing it completely safe and minimizing change may greatly improve your adoption rate, but the changes and improvements could be so subtle that you cannot realize the full potential of your CLM investment. Such a strategy fails to achieve adequate improvement.

When designing and building your CLM system you must keep in mind that even change for the better can be challenging for most people. Use the Principles of Excellent CLM User Experience to maximize both improvements and user adoption. Consider a phased approach that rolls out new features and functionality over time to make improvements slowly but surely.

You must also take into account the means by which you will train, enable, and onboard users. Ensure you have a change management plan that includes adequate communication, training, and championing from your organization's leaders. Think strategically about system design, delivery phasing, and change management to optimize process improvement and adoption simultaneously.

Conclusion

Designing and building a great CLM system requires an understanding of the sometimes opposing goals of CLM and how to effectively optimize those goals. You must understand where there is a necessary give and take and where CLM allows you to do more than you otherwise would without it.

Take heed of the lessons in this article and you will be well on your way to designing and building an optimized CLM system.